Buying Jazztel would give Orange about 1.5 million broadband subscribers to help bolster offers of combined broadband, TV and wireless packages.

"We are doing this deal to accelerate our growth in Spain, particularly in fixed-mobile convergent offers," Orange Chief Executive Stephane Richard said in a statement.

- 'Consolidation to keep advancing' -

Consolidation of the crowded and deeply fragmented European telecom market has intensified over the past year as small players have fallen prey to bigger rivals, reducing the number of operators in each market.

Analysts say a reduction in the number of large operators could help boost profit margins in the industry after years of fierce competition during an economic downturn.

In April, European cable group Altice won a bidding contest for France's second-biggest telecom operator SFR, beating a government-backed offer from Bouygues by agreeing to a deal valued at over 17 billion euros.